Over the last few years, I’ve been focusing heavily on our financial future and what we could have when we retire. I recently calculated all of the responsible dollars that we spend every year (roughly $67,650 or $5,637.50 each month). With all of our future planning, I never thought about what “now” we are giving up for $3.6M in 25 years. So I decided to figure out how our lives would be different if we spent 100% of our “responsible dollars” irresponsibly.
The “now” we are trading for the future.
Currently, we’re paying $1,645 on our mortgage, insurance and taxes. But, if we doubled our housing budget we could spend ~$3,500 on this home in Virginia (in a similar area to where we live now):
This gorgeous home (with some opportunities for improvement) triples our living area! We will need that extra space now that we are spending a few extra thousand dollars a month on stuff! After our new mortgage payment, and a ~$600/month home cleaning/maintenance services, we have $2,900 in discretionary income per month left over.
New Whips! (that means cars… I think)
Of course we would need new cars to go along new home. I figure we would each get a fun car to drive and a family car. I’d take a Dodge Charger Daytona Edition. My wife would take a Ford Mustang GT Convertible. And for family travel, we would get a Chrysler Pacifica Hybrid minivan. After we traded in our current vehicles, we could expect to pay about $1,400/month on the car leases and insurance. After our monthly payment, we would have ~$1,500 left in discretionary income.
Say goodbye to the Target clearance rack! We would find ourselves shopping on the weekends to keep ourselves looking stylish. One month it might be a new Coach purse, the next it might be a nice Laco watch. With $600 extra to spend on clothes each month, we could start making a dent in those walk-in closets. After the $600/month clothing budget, we are down to $900 per month to spend on ourselves.
Hot new tech!
Adios iPhone SE , hello iPhone XS Max! Upgrading to the most expensive iPhone would “only” cost an extra $42/month. Naturally, that $42 would stretch into infinity as I would upgrade my iPhone every year. Of course I can’t leave my wonderful spouse without the latest phone. She would take the new Pixel 3, which would be an additional $15/month over her existing phone. If we invested that money instead, the phone upgrades would be worth over $85,000 when we reached retirement age. But who cares about retirement!?
After our phones, I’d devote ~$200 per month to other techy type upgrades. Quality smart speakers in every room of the house, smart light bulbs, Amazon Fire TV sticks at every tv! After our new tech budget, we are down to $650 per month to spend.
Seasonal home furnishings!
New decorations and throw pillows 4 times per year? I think my wife may have died and gone to heaven. An extra $200 per month to spend at Home Goods? Yes please! This budget would ensure that the inside of our house matched whatever Joanna Gaines said it should. Another $200 down, we’re left with $450 to spend each month.
Our new high class lifestyle will be undoubtedly stressful. No better way to deal with that stress than bi-weekly massages for both of us. But why stop there? We might as well schedule regular manicures and pedicures. We will need to look and feel our best while we sit in our big “smart” home with our new clothes and watch other people clean our house and mow our lawn. We’ll assume that we will spend the remaining $450 on spa treatments.
While living this way could be fun (I know I would love driving around in that sweet Charger) the truth is that we wouldn’t really have that much time to enjoy our new toys. We would still be working our jobs, which, between those and our kids, only give us an hour to ourselves each weekday before we go to bed. And while we would have the weekends to drive around our fun cars, our other responsibilities would keep us from really using them.
And unfortunately, because we aren’t saving any money, we would never find the time to enjoy the things we could buy. We could never retire from full time work and expect to maintain this lavish lifestyle. We would also always be a lost job away from oblivion, unable to pay for bills. Our future goal of paying for a big annual family trip to the beach would never be able to happen.
One Thing Surprised Me
I checked how much money we would have at retirement if we did stop saving altogether. By the time I reached 62, our ~$192,000 (based on our recent net worth update) in 401k and Roth IRAs would still grow to $1,600,000. I was surprised, and honestly relieved that if worst did come to worst, we would have enough to live comfortably in retirement. And if we shut off all of our retirement saving except for our 401k to get the match (5%) we would end up with $3,100,000 at 62. It just goes to show you how important it is to save as early as possible.
Fortunately, we have 4,058 days to save for retirement and plan on having enough money, and enough good years left to enjoy it.